Consultation on Credit Assessment Price increase to £380/MWh

This page gives details of a consultation on increasing the Credit Assessment Price (CAP) to £380/MWh from the last notified value of £305/MWh. This two-day consultation will close at 17.00 on 20 December.

Update impacting this decision

(Published: 5 January 2022)

Please note the last notified CAP value of £380/MWh will not go live on 7 January following a Credit Committee decision on 5 January 2022 to retain the current CAP of £305/MWh.

There is now a consultation (dated 5 January 2022) on increasing the Credit Assessment Price (CAP) to £340/MWh.


On Friday 7 January 2022, the CAP value will increase to £380/MWh. As a result, Parties may notice a change in their Credit Cover Percentage and should review the amount of Credit Cover lodged.

In accordance with the alternative CAP Review Process the implementation period for a new CAP has been shortened to 10 working days and the CAP will be reviewed by the Credit Committee every two weeks. The next Credit Committee meeting to determine the CAP will be on 29 December 2021.


Who will this impact?

The Credit Assessment Price (CAP) is used in the Energy Indebtedness calculations to convert Credit Cover into an energy value. A change to CAP can impact the amount of Credit Cover required by a BSC Party.

When the CAP changes it may affect the amount of credit cover that suppliers and generators are required to lodge with us. For some Parties this may mean additional collateral needs to be lodged.

We recommend monitoring your Indebtedness and Credit Cover Percentage calculations on the Elexon Portal to understand how this change may affect your Party.

If all respondents and Credit Committee members are in agreement, the proposed value will be implemented on Friday 7 January 2022.

Please note the last notified CAP value of £305/MWh will still be implemented on Friday 17 December 2021.

Alternative CAP Review Process

Credit Committee members have decided to continue using the alternative Credit Assessment Price (CAP) Review process due to fast market conditions. This alternative process allows the Credit Committee to set a new CAP faster, review the CAP every two weeks and base their assessment on a wider range of data sources.

Please note this alternative process is outlined in the CAP Review Process Guidance.

To allow the faster implementation of CAP values during the alternative CAP review process, the Credit Committee will initially consider your consultation response ex committee. However, your response will be considered in more depth at the next Credit Committee meeting. The next Credit Committee will be held on 29 December 2021.

Consultation questions

The questions in the consultation are:

  • Do you agree with the proposal to increase the Credit Assessment Price (CAP) to £380/MWh?
  • If your answer to Question 1 is ‘No’, please give the value of CAP that you consider to be more appropriate and your rationale for that value.
  • Do you have any further comments relating to the appropriate value of CAP or the other points made in the consultation document?

How to respond

You can respond to this consultation online. All responses must be submitted by 17:00 on Monday 20 December 2021.

If you wish to save and return to your response, or share your response with a colleague before submitting then use the save and return button at the bottom of the form. You will then be given a link with your draft response that you can return to or share before submission.

If you would like a follow up from Elexon about your consultation response, please provide your contact details in the form.

For any enquiries about responding to this consultation, please contact [email protected]

Rationale behind proposed CAP value

The Credit Committee met on 16 December 2021 to consider an appropriate CAP for implementation on 7 January 2022. As the CAP is reviewed every two weeks, the proposed CAP will be live between 7 January 2022 and 17 January 2022 at a minimum.

The Credit Committee reviewed the three consultation responses to the previous CAP consultation. These consultation responses questioned whether the data that the Credit Committee has been basing its decisions on is representative of other index prices.

The Credit Committee have been using ICIS Heron peak and base, power price assessments as the primary information for many years to inform their decisions. The data that the committee were provided with is shown in the graphs below.

Elexon provided initial analysis that some of the higher forecast prices and higher priced Offers weren’t appearing in the final System Price due to Net Imbalance Volume Tagging. Therefore the Credit Committee decided to be sceptical of whether the forecast peak prices would feed into average System Prices.

The Credit Committee gave greater weighting in their consideration to the latest forecast for what prices will be in January 2021. On the date of the meeting, average forward market prices were at £447/MWh for January with latest peak Prices at £537/MWh and latest base prices at £358/MWh. The large range between the peak and base prices was of concern to the Credit Committee, as was the increase from the last notified value of £305/MWh.

The most recent System Prices were considered, the Credit Committee noted that there was likely to be System Price spikes during period when the proposed CAP would be live.

The Credit Committee also considered how well the CAP had been tracking average System Prices since 1 October 2021. The two CAP’s that have gone live because of the alternative CAP review arrangements have been representative of average System Prices.

The Credit Committee decided to propose a CAP of £380/MWh. The Credit Committee were mindful of their responsibility to ensure that the CAP will provide a representative proxy for System Prices in January 2022. They were also mindful to be sceptical of whether the higher peak prices would out turn in the System Prices.

The committee proposed a CAP that is closer to the latest baseload month+1 power price assessment from ICIS. They considered that if current trends continue, they will need to increase the CAP again at their next meeting.

The graphs below contains the data that was presented to the Credit Committee to help inform their proposal. There are six graphs, you can move between the graphs by using the arrows at the bottom. There are also options to filter the data by using the buttons on the right hand side of the graphs.

The Credit Committee are also investigating how an issue group could be raised to provide a more fundamental review of the Credit Cover arrangements.

Decision to retain the alternative CAP Review Process

The Credit Committee also considered whether it was appropriate to retain the alternative CAP review process. It was noted that the latest Reference Price, based on forward market prices for December and January is £413.27/MWh. Under the normal CAP review process this would breach the upper trigger level (+/- £30/MWh) of the last notified CAP value £305/MWh.

The Credit Committee considered that the absolute price changes in the market, as well as the changes on percentage basis were considerable. Hence, they agreed that it was still appropriate to retain the alternative CAP review process.

Next Steps

Following the end of the consultation period, if required, the Credit Committee will consider any consultation responses without holding a meeting, and decide whether to change the current CAP value.

Consultation responses will be considered in more detail at the next Credit Committee meeting, which currently occur every two weeks.

Any change will be notified to all BSC Parties, and the new value will come into effect at least 10 Working Days later.

The next review of the CAP under the alternative CAP review process will be in the week commencing 29 December 2021.

Further guidance

If any Parties have questions or concerns about the CAP, please reach out to our team at [email protected].

If you have questions or concerns about how the change to CAP may impact your Credit Cover please get in contact with [email protected].


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